Investors believe that in the context of the bad performance of the world and national economies, the liquidity, not the expected profit, should be considered as the most important thing for them to consider when making investment decisions.
According to Dr Vo Tri Thanh, Deputy Head of the Central Institute of Economic Management (CIEM), in terms of liquidity, the investment channels can be put in the order as follows: Vietnam dong, US dollar, gold, shares, bonds and real estate.
Vietnam dong now has its big advantages over the other investment channels, because commercial banks still offer high deposit interest rates (9 percent per annum for less-than-12-month term deposits, and 11-12 percent for long term deposits), while the dollar interest rate is not higher than 2 percent per annum.
Though agreeing that Vietnam dong is the No. 1 in the list of priorities, some experts have argued that the liquidity of gold is higher than US dollar. It is now easier to convert Vietnam dong into gold and gold into Vietnam dong.
Meanwhile, the State Bank of Vietnam is trying to keep a tightened control over the foreign currency market, while it does not encourage people to hold foreign currencies. Foreign investors can convert US dollars into Vietnam dong only after they register the conversion to the State Bank of Vietnam.
It’s also difficult to convert Vietnam dong into US dollars, because under the current regulations, investors must show legitimate reasons to get approval.
The experts also believe that shares should be put ahead of dollars in the ranking of liquidity, because it would be quicker to convert shares into Vietnam dong than exchanging US dollars for Vietnam dong.
However, other experts have argued that shares can be put into trade from 8.30 am to 2.15 pm only. Besides, money would be remitted into the sellers’ accounts three days after the transactions are made. Therefore, one cannot say shares have higher liquidity than dollars or gold.
However, all of the experts have agreed that real estate should be put at the bottom of the ranking. The property market has been hibernating for a long time with very few successful transactions. No one can say for sure when the property market would warm up, even though a lot of measures to activate the market have been taken recently.
If considering the profitability – the index which shows the attractiveness of investment channels – Vietnam dong, once again, is considered the most profitable investment channel.
With a series of drastic measures taken recently, the dong/dollar exchange rate has become stabilized. Meanwhile, the State Bank has affirmed that the dong would not lose more than 3 percent of its value by the end of the year. This means that keeping dollars would not be a wise choice.
Meanwhile, it’s very risky to invest in gold due to the price fluctuations of the precious metal. This means that gold should not be the suitable investment channel for small and inexperienced investors.
The current gloomy stock and property markets would not bring profits to investors. Especially, listed companies have reported very bad business performance for the first half of the year, while the situation would be even worse in the third quarter. Meanwhile, real estate trade has seen a sharp decrease of 40 percent in recent months.
As such, keeping Vietnam dong proves to be the best solution for now. The CPI increase, the biggest worry for dong keeper, has been slowing down.